Deputy Crown Prince Mohammed bin Salman of Saudi Arabia has revealed that the Kingdom is already making plans for a post oil era.
Bloomberg reports that the Deputy Crown Prince laid out his vision for the Public Investment Fund (PIF), which will eventually control more than $2 trillion and help wean the kingdom off oil in a conversation that lasted over five-hours last Thursday in Riyadh.
This comes as oil dependent countries like Nigeria and Venezuela have made desperate efforts to reduce their dependence on oil following the oil price crash.
As part of the strategy, the prince said Saudi will sell shares in Aramco’s parent company and transform the oil giant into an industrial conglomerate. The initial public offering could happen as early as 2017, with the country currently planning to sell less than 5 percent.
“IPOing Aramco and transferring its shares to a PIF will technically make investments the source of Saudi government revenue, not oil,” the prince said in an interview held at the royal compound in Riyadh.
“What is left now is to diversify investments. So within 20 years, we will be an economy or state that doesn’t depend mainly on oil” he said.
The fund will play a major role in the economy, investing at home and abroad. It would be big enough to buy Apple Inc., Google parent Alphabet Inc., Microsoft Corp. and Berkshire Hathaway Inc. — the world’s four largest publicly traded companies.
PIF ultimately plans to increase the proportion of foreign investments to 50 percent of the fund by 2020 from 5 percent now, said Yasir Alrumayyan, secretary-general of the fund’s board.
The fund has been hiring specialists for markets, private equity and risk management, said Alrumayyan, PIF’s secretary-general and a former chief of Credit Agricole SA-backed Saudi Fransi Capital.
“We’re working now on different fronts,” he said. “Now the government is transferring some of its assets, lands, some of the companies to us. We have different projects in tourism and in new industries that are untapped in Saudi.”
He described the overseas investment plan as “very aggressive,” though he said the PIF would initially be skewed toward domestic assets by the addition of Aramco.
“Undoubtedly, it will be the largest fund on Earth,” the prince said. “This will happen as soon as Aramco goes public.”
